After discovering that no one in his office routinely reviewed the investment choices that backfired on OppenheimerFunds Inc., state Treasurer Ben Westlund has ordered his staff to more closely monitor the state's $770 million college savings program.

Ron Schmitz, chief investment officer for the investment division at the Oregon Treasury, said that as of last week, his staff will regularly report on the network's investment-related issues to the state board overseeing the Oregon 529 College Savings Network.

"There was a tangential relationship," Westlund said in an interview Friday. "We're just involving the investment division in a more formal way to assist with the board's oversight responsibility."

Schmitz's division routinely offers the same kind of advice to the Oregon Investment Council, which oversees the public employee retirement fund. He said his office never vetted the OppenheimerFunds' Core Bond Fund, which has caused deeper-than-expected losses throughout the college savings plan.

Westlund's move last week comes after parents invested in OppenheimerFunds' most conservative portfolios lost millions of dollars when the bond fund fell 35 percent after investing in risky mortgage-backed securities and derivatives.

Last week, the board dropped the bond fund and suggested that OppenheimerFunds might be replaced. Oregon Attorney General John Kroger is investigating whether the firm violated its state contract or securities laws. OppenheimerFunds says its managers took risks that historically have been considered appropriate.

An increasing number of parents and attorneys are considering suing the state or OppenheimerFunds to recover millions in losses. Seattle firm Keller Rohrback said it is considering filing a class-action lawsuit against OppenheimerFunds on behalf of parents who lost money in college savings plans in Oregon, Texas, New Mexico, Illinois and Maine.

OppenheimerFunds is not affiliated or related to Oppenheimer & Co. Inc.

Earlier this week, Portland attorney Christopher Kent notified the state that he intended to sue to recover losses suffered in his four children's accounts. Kent accused former Treasurer Randall Edwards of failing his duties.

"The previous administration failed to provide any oversight, and worse pretended to do something, while really doing nothing," Kent wrote to Westlund. "The last chapter of this story is now up to you to write."

In an e-mailed statement Friday, Edwards said his office took "escalating action" when the Core Bond Fund declined. He said he consulted with Westlund about actions being taken with regard to the plan.

"Oregon was the first state in the country to flag the significant issues with the Core Bond Fund," he said.

Westlund said he is awaiting the results of the state attorney general's report but disagreed that the state was at fault, pointing a finger instead at OppenheimerFunds.

"If the state is culpable in any way, that is only because Oppenheimer did not properly represent or disclose to the board," Westlund said.

State law requires the Oregon College Savings Board, a five-person group chaired by the treasurer, to administer the savings network.

Specifically, state law says the board shall "exercise the judgment and care ... that persons of prudence, discretion and intelligence exercise in the management of their own affairs with due regard to the probable income and level of risk from certain types of investments of money, in accordance with the policies established by the board."

But state law also exempts the network, the board and the state from liability for any loss incurred by any investor in the network. That clause will give lawyers pause in bringing a case against the state, attorneys say.

In his letter, Kent offered to sit down informally or through a mediator to negotiate with the state on recovering money for all plan participants.

"You are stewards of millions of dollars that were supposed to be in conservative, low risk portfolios," Kent wrote. "This case is relatively straight-forward -- the funds were not invested in 'conservative' and 'ultra-conservative' investments as represented. That is a misrepresentation."